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Category: Investment Facts

Singapore Startup: This HR Tech Firm Worth $100 Million Is Ready To Conquer Asia

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In the dizzying world of technology startups, it’s easy to get lost in the hype of hot trends such as AI, blockchain, VR/AR and machine learning. What is often forgotten is the fact that some of the best startups in the world solve the simplest of problems.

This is exactly the approach that Pascal Henry, who is the CEO and cofounder of HReasily, took when he identified the fundamental needs of rapidly growing SMEs–to manage their human resources more efficiently.

Henry launched his Singapore-based HR firm in late 2015 as a Software-as-a-Service (SaaS) business that enables companies to increase productivity by using technology to streamline traditional processes such as payroll processing, leave management and expense claims.

“When I was running my first startup in Singapore, I had to do a lot of the manual processes myself. I felt the pain and the drain of it,” explains Henry. “It was taking up a lot of my time and energy, when I should have been focusing on building my business.”

Today In: Asia

 

Improving productivity and efficiency

HReasily’s mission is simple: To innovate and automate HR throughout the world. As one of the fastest-growing cloud-based HR SaaS companies in the region, their simple modules and features aim to transform many of the legacy HR processes and automate them to be accessible anytime and anywhere. Currently the company offers seven modules including payroll, staff leave, employee contracts and attendance. As HReasily grows, it continues to add product lines aimed at empowering companies to scale faster.

Previously, many businesses used solutions that each looked after a particular silo of an HR department. So you’d have one system to manage your payroll calculations, one for leave and others for other functions.

“What happened was you had to log in and out of many various systems, and these systems cost a huge amount of money,” says Henry. “What we’ve done is build a solution that is very affordable that integrates with all the functions on a unified platform.”

A simple but elegant business model HReasily runs a subscription-based revenue model. Starting with payroll, which is at the core of every traditional HR office, the company offers premium versions that run on monthly or yearly subscriptions, with add-on modules available such as staff leave and time attendance. This past summer at the RISE 2019 conference in Hong Kong, Henry and his team unveiled their latest benefits management module which will soon allow customers to acquire group level insurance, healthcare and even apply for credit cards or loans.

HReasily says its competitive advantage lies in its customer base, which is mostly SMEs. By initially focusing on the fundamental needs of this particular segment, the company has earned the support of larger banking and government agencies and has become known as an “SME champion.” Not surprisingly, as the company has grown it says that it began to attract larger corporations, publicly listed companies, multinational corporations and even payroll outsourcing firms.

“As we grew we acquired a more diverse customer base,” Henry says, “because a lot of larger companies are tired of the older and expensive solutions because they need to be installed on premise and they require a refresher every year when rules and regulations change.”

Partnerships are the key to rapid growth

Being based in Singapore has allowed HReasily to capitalize on the rapid growth in Southeast Asia. SME’s account for 97% of all the enterprises in the region, and employ half of the workforce, according to data from Asia-Pacific Economic Cooperation (APEC). HReasily’s growth has been nothing short of impressive. With nearly 30,000 companies on their platform and more than 100 new companies onboarding every day, HReasily is said to be growing rapidly in Singapore, Hong Kong, Malaysia, Indonesia, the Philippines, Thailand, Cambodia and Vietnam.

Some of HReasily’s notable customers include Love Bonito (in Singapore, Indonesia, Malaysia and Hong Kong), Sambat Finance (Cambodia), OnlinePajak (Indonesia) and TechInAsia. As the company looks to complete their coverage of Asia, the next major market they look to tackle is mainland China followed by Taiwan, Japan, Myanmar and Australia.

Investors have taken notice of the company’s growth as well. Fresh off a pre-series A funding round of $5 million from Envy Capital, HReasily is currently estimated to be valued at more than $100 million. Henry admits that the company’s rapid growth in the region has only been possible with the early support from their key strategic partners.

HReasily has been working with Citibank, Mazars and Stripe. The partnership with Mazars, which was a lead investor from the startup’s first round of funding, gives them access to a global audit, advisory and payroll outsourcing firm with 300 offices in 100 countries. Henry says it allows HReasily to localize its solutions to each individual market.

“Today, building a solid ecosystem of strategic partners is very important because you come from different angles, but you all serve one customer, which is the SME or the business,” says Henry. “By coming together, we collectively create a great end-to-end experience for them. There’s strength in numbers.”

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Jay Kim

Jay Kim is a full-time investor and the host of the popular podcast The Jay Kim Show, Hong Kong’s first dedicated podcast on entrepreneurship and investing in Asia. Inc. Magazine has named The Jay Kim Show one of the top three podcasts from Asia which are inspirational and useful to entrepreneurs. Jay is an avid supporter of the start-up ecosystem in Asia and frequently consults with leaders in local government on topics related to technology, entrepreneurship, early-stage investing and startups

Source: Singapore Startup: This HR Tech Firm Worth $100 Million Is Ready To Conquer Asia

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Borderless Investing: Eduardo Saverin And Raj Ganguly Grow B Capital

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Eduardo Saverin and Rajarshi “Raj” Ganguly are two of the three cofounders of B Capital Group, a venture capital firm with close to $800 million, split between a first and a second fund (still being raised). The third cofounder is legendary investor Howard Morgan. Brazilian Saverin, 37, is based in Singapore and best known for being the cofounder of Facebook – whose shares in it give him a net worth estimated at about $10 billion.

Americans Ganguly, 43, and Morgan, 73, come from diverse backgrounds. Ganguly, based in Los Angeles, spent his early career at Bain Capital, overseeing a number of investments. Morgan, based in New York, helped start ARPAnet, the internet’s precursor, in the 1970s, and later was president of hedge fund Renaissance Technologies.

B Capital has dual headquarters in Los Angeles and Singapore, as well as offices in New York and San Francisco, with a total of 40 full-time staff. B Capital focuses on companies already in series B or C rounds, generally over $10 million in revenue, and looks to invest roughly $20 million. The trio would like to keep the total number of companies in each fund to about 20.

The firm has the slogan “innovation without borders,” reflecting the founders’ belief that innovation can originate anywhere, not just in Silicon Valley. B Capital also uses global consultancy Boston Consulting Group (BCG) to help it grow startups and match them with larger firms. Saverin and Ganguly sat down with Forbes Asia in an exclusive interview in September at Singapore’s Shangri-La hotel to discuss their goals for B Capital.

Today In: Asia

Forbes Asia: How are you deploying your capital into startups?

Eduardo Saverin: Primarily we focus on companies that have an existing level of traction. There are a lot of places where you could invest in technology, but you need to have an edge and focus. For us, together with our relationship with BCG, it’s about accelerating growth. Most companies we invest in have a B2B angle. When the company is still an idea on a napkin, it’s hard for us to introduce them to some of the largest companies in the world. So we tend to invest where there’s a particular amount of value that we can bring through those corporate introductions and value acceleration, which means they tend to translate to series B and beyond. But frankly the staging is fungible. It’s about traction.

Raj Ganguly: As we build the firm we want to be really conscious of being able to invest into some companies really early, probably smaller amounts of capital, and as some of those companies scale and grow, we want to bring larger amounts of capital to those companies. Then finally for some of the companies that really continue to go into highly accelerated growth mode, we would actually not just double-down, but we would take outsized ownership stakes. As we’re growing the capital, we’re increasing our ability to invest across multiple stages. The best use of our capital, rather than finding a new investment, is finding a company in our portfolio where we can see the trajectory of the company before an outsider can see it.

What is the value-add you want to bring to your entrepreneurs?

Ganguly: We focus on doing three things really well ourselves and then partnering with BCG and others for everything else. We focus on helping make introductions and really helping get that growth flywheel going. The second part is we are focused on hiring key C-level talents into companies once we invest into them. We find that every single time we make an investment, if we can help them with one or two better hires on the margin, it fundamentally changes the direction of the company. And third, we help them raise strategic capital. We think, while it’s great to have other venture capital firms and folks like that, there are so many large enterprises sitting on over $1 trillion of capital and many of them want to invest and partner with startups. They could be much more strategic in the capital and the value that they bring.

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Juliana Tan for Forbes Asia

Can you give an example of this value-add to a portfolio company?Saverin: One of our early investments was in a company in the clinical trials space called Evidation Health. It’s a perfect example of a business where they can develop all the technologies that they would like. The truth is, success will come from adoption of virtual clinical trials from the largest pharma companies in the world. When we first met the business, it was working with a lot of smaller biotech firms, which are the traditional early adopters of such technologies. But leveraging our partnerships, including BCG, we had a chance to meet with some of the largest pharma companies in the world.

Through those discussions we understood that, unlike traditional tech innovation cycles where things over time get a little bit cheaper and faster, in the pharma world, you were seeing kind of a reverse innovation cycle where it was getting more expensive and taking longer to get to market.

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Juliana Tan for Forbes Asia

And one of the largest pharma companies in the world took one of their existing trials that they had already done, and then just replicated it through a virtual standpoint, and saw both the speed, the cost effectiveness, and the depth of the data. That gave us conviction to invest, because we knew there was a real appetite for experimentation. Today, that business has most of the largest pharma companies in the world as customers. Some of them have become investors.

Ganguly: It just announced, a few weeks ago, a landmark partnership in dementia with Apple and Eli Lilly. We’ve been a part of helping make some of those connections.

What’s unique about B Capital’s approach to investments?

Ganguly: There are four key parts of our model. It’s about global thematic investing, one single team leveraging global data. It’s about deep local expertise in each market that we invest in. It’s about being the single highest value-add investor in every company and having the capital through partnerships with our investors and through our own capital to fund the growth of these companies as they scale. Our risk model is a lower risk model than early stage, which is about investing in ideas on a napkin, and having one of 20 companies that you know will drive your whole returns. Our model is about backing companies that have customer traction, that have a founding team that has high potential. We are looking for large potential customers and large potential partnerships that further mitigate risks. We believe our approach has upside because we’re investing in companies that are growing at 100% plus a year.

Saverin: The VC game is an information edge game. You need to leverage it not just in the first investment, but across the lifecycle of the company. Our model is about rolling up our sleeves and getting deeply involved, where entrepreneurs want us to, and where we can tremendously add value.

You believe in innovation without borders, can you expand on that idea?

Saverin: Companies are becoming global increasingly by design. There’s no border to where innovation can be received and used. Whether you start a company in Silicon Valley or in Africa or any part of the world, there really is the increasing impetus to go beyond your existing borders. When you start thinking about the evolution of innovation, some of it is the enablers, including the engineering talent. When you go to Silicon Valley, that’s actually one of the hardest places in the world to get engineering talent because of the massive competition. In other parts of the world you can ask is there enough raw talent, even though it’s not as competitive? So we’ll see a broader equalization. It would be hard for me to believe that as tech enablement becomes a big part of much larger industries, that all that innovation will come from one place. If that were to happen, I’d do anything I can to change it because the truth is the whole world is consuming technology.

What opportunities do you see in Southeast Asia?

Ganguly: We understood early that e-commerce was being inhibited in the region because e-commerce companies had to do their own delivery. That’s what really convinced us that we wanted to invest in all the picks and shovels around e-commerce, but no longer invest in e-commerce, or at least not focus on e-commerce. So today we’re investors in Ninja Van, BlackBuck, Mswipe and Bizongo, all companies that enable e-commerce.

Given WeWork’s pulled IPO, have valuations gotten overdone?

Ganguly: Where we are in the cycle and when it changes, that’s not our business. We don’t time the market, but we fundamentally take a long-term perspective. There are times when you’re in a cycle and you have to pay a little bit more for that. But if you have the right time horizon, we think it’s still far better to do that than to be looking for value plays where you’re looking at the second- or third- or fourth-best company. We always say that you might sleep better if you have a value play, but you won’t sleep very well when you exit because the valuation differential is even more stark when you exit a lower-tier player. It used to be that you were forced to go public because you had to pay out early investors. That’s no longer the case. You can now continue to stay private, and have access to very large amounts of private capital. Your early investors can cash out because later stage investors are willing to buy them out. There’s a very active secondary market. What’s changed is I think there’s no longer this belief that going public is something that you have to do. There are a lot of questions about whether going public drives long-term value. While it’s worked for some companies, it hasn’t worked for others.

What would be the process if a portfolio company might fit with Facebook?

Saverin: We are trying to facilitate introductions with any enabler, hopefully a win-win on both sides. So Facebook of course would be part of that equation, and parts of its strategy that converge with some of our focus areas, especially in financial services. Many companies will already have some type of relationship with Facebook, given where Facebook is today, through WhatsApp or otherwise. The innovation ecosystem touches Facebook all the time, so it’s just a question of extent.

Where is B Capital going to be in 10 years?

Saverin: That’s an important question. I usually think about it in two ways. We are incredibly ambitious, and we want to have an institution that will outlive us, so we are always thinking of the very long term. One thing I say every single day, whether in our partner meetings, or when we speak to our entrepreneurs, is to always push focus. Focus on what you’re doing today, that’s how you’re going to get to a bigger vision ten years from now, and even a vision well past our lifetimes. But at a really top level what I want us to do is to enable technology to get into the hands of consumers faster by leveraging the existing distribution networks of the largest companies in the world. Push intrapreneurship, it doesn’t necessarily need that push, but enable them to not only think of disruption but a positive win-win transformation. It’s not about the top ten tech companies that will take over a market by themselves, but the enablement of every company in the world with technology in collaborative innovation.

What do you mean by collaborative innovation?

Saverin: This is a really high-level idea, that can be seen in the platform technologies, such as Facebook, WeChat and others. They have created massive innovation acceleration by enabling other businesses to come on top of their platforms to gain distribution and engagement. What we are looking for is a win-win using the distribution assets of the largest companies in the world to ultimately get API-ed to the innovation ecosystem. If we get even 0.5% of the way in driving that, we will be doing the right thing for ten years from now. I think it’s not always a success when a startup out-innovates and massively disrupts a big company, when it could have leveraged a big company’s distribution, the licenses, the regulatory know-how, and so on, so that consumers could get the advantages of technology much faster.

This conversation has been edited and condensed for clarity.

Pamela Ambler

Pamela covers entrepreneurs, wealth, blockchain and the crypto economy as a senior reporter across digital and print platforms. Prior to Forbes, she served as on-air foreign correspondent for Thomson Reuters’ broadcast team, during which she reported on global markets, central bank policies, and breaking business news. Before Asia, she was a journalist at NBC Comcast, and started her career at CNBC and Bloomberg as a financial news producer in New York. She is a graduate of Columbia Journalism School and holds an MBA from Thunderbird School of Global Management. Her work has appeared in The New York Times, Washington Post, Yahoo, USA Today, Huffington Post, and Nasdaq. Pamela’s previous incarnation was on the buy side in M&A research and asset management, inspired by Michael Lewis’ book “Liar’s Poker”. Follow me on Twitter at @pamambler

Source: Borderless Investing: Eduardo Saverin And Raj Ganguly Grow B Capital

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Eduardo Saverin, Co-Founder, Facebook & Co-Founder at B Capital Group alongside Raj Ganguly, Co-Founder at B Capital Group discuss how global trends in innovation and venture capital can be leveraged to benefit entrepreneurs beyond Silicon Valley. Fore more news and insights visit SuperReturn365: https://goo.gl/9nEbXA

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How’s the Consumer Doing? Financial Sector Earnings Next Week Could Help Tell Us

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Key Takeaways:

  • Big banks to kick off reporting season the week of October 14
  • Earnings for sector expected to fall slightly, analysts say
  • Brexit, trade, consumer health on topic list for Financial earnings calls

During Q2 earnings season, Financial sector results helped renew investor confidence in the U.S. consumer.

The question heading into Q3 is whether banking executives still see the same kind of strength, and if they think it can continue amid trade wars, Brexit, and signs of weakness in the U.S. economy.

Over the last three months, as the broader stock market rallied to an all-time high, slammed the brakes, and then re-tested earlier peaks, consumer health arguably did much of the heavy lifting. It felt like every time stocks pulled back, they got a second wind from retail sales, housing or some other data or earnings news that showed consumers still out there buying.

Today In: Money

The banks played a huge role in setting the stage by reporting better-than-expected Q2 results that showed signs of strong consumer demand even as some of the banks’ trading divisions took a hit. Next week, six of the biggest banks come back to talk about their Q3 experience and what they expect for Q4. Analysts expect Financial sector earnings to drop slightly in Q3.

That said, most of the major banking names have done an excellent job keeping costs in check as they wrestle with fundamental industry headwinds like falling interest rates and slowing revenue from their trading divisions. This time out, it wouldn’t be surprising to see more of the same, and you can’t rule out a bit more vigor from the trading business thanks to all the volatility we saw in the markets last quarter.

Earnings growth may not be there for Financials this time around, or it could be negligible. At the end of the day, though, Financial companies are still likely to be remarkably profitable considering a yield curve that remains relatively flat and global macroeconomic concerns, according to Briefing.com. This sector knows how to make money, but it might just not make as much as it did a year ago. Earnings will likely show large banking companies still in good financial condition with the U.S. consumer generally in decent shape for now, as the U.S. economy arguably remains the best-kept house on a tough block.

Investors have started to pick up on all this, judging from the S&P 500 Financial sector’s good health over the last month and year to date. The sector is up 3.4% from a month ago to easily lead all sectors over that time period, and up 15% since the start of 2019. The 15% gain is below the SPX’s 17% year-to-date pace, but it’s an improvement after a few years when Financials generally didn’t participate as much in major market rallies.

What to Listen For

No one necessarily planned it, but it’s helpful in a way that banks report early in the earnings season. Few other industries have larger megaphones or the ability to set the tone like the biggest financial institutions can. The other sectors are important, too, but they often see things from their own silos. Combined, the big banks have a view of the entire economy and all the industries, as well as what consumers and investors are doing. Their positive remarks last quarter didn’t really give Financial stocks an immediate lift, but it did apparently help reassure investors who were nervous about everything from trade wars to Brexit.

Going into Q3 earnings, those same issues dog the market, and bank executives have a front-row seat. How do they see trade negotiations playing out? Can consumers hold up if trade negotiations start to go south? How’s the consumer and corporate credit situation? Will weakness in Europe spread its tentacles more into the U.S.? And is there anything bank CEOs think the Fed or Congress can do to fend off all these challenges?

On another subject closer to the banks’ own business outlook, what about the shaky initial public offering (IPO) situation? That’s getting a closer look as a few recent IPOs haven’t performed as well as some market participants had expected. One question is whether other potential IPOs might get cold feet, potentially hurting businesses for some of the major investment banks.

All the big bank calls are important, but JP Morgan Chase (JPM) on Tuesday morning might stand out. Last time, CEO Jamie Dimon said he saw positive momentum with the U.S. consumer, and his words helped ease concerns about the economic outlook. More words like that this time out might be well timed when you consider how nervous many investors seem to be right now. On the other hand, if Dimon doesn’t sound as positive, that’s worth considering, too.

While few analysts see a recession in the works—at least in the short term—bank executives might be asked if they’re starting to see any slowdown in lending, which might be a possible sign of the economy putting on the brakes. Softer manufacturing sector data over the last few months and falling capital investment by businesses could provide subject matter on the big bank earnings calls.

Regionals Vs. Multinationals

While big banks like JPM operate around the world and might be particularly attuned to the effects of trade, regional banks make most of their loans within the U.S., potentially shielding them from overseas turbulence.

Regional banks also might provide a deeper view into what consumers are doing in the housing and credit card markets. With rates still near three-year lows, we’ve seen some data suggest a bump in the housing sector lately, and that’s been backed by solid earnings data out of that industry. If regional banks report more borrowing demand, that would be another sign pointing to potential strength in consumer sentiment. Refinancing apparently got a big lift over the last few months, and now we’ll hear if banks saw any benefit.

One possible source of weakness, especially for some of the regional players, could be in the oil patch. With crude prices and Energy sector earnings both under pressure, there’s been a big drop in the number of rigs drilling for oil in places like Texas over the last few months, according to energy industry data. That could potentially weigh on borrowing demand. Also, the manufacturing sector is looking sluggish, if recent data paint an accurate picture, maybe hurting results from regional banks in the Midwest. It might be interesting to hear if bank executives are worried more about the U.S. manufacturing situation.

Another challenge for the entire sector is the rate picture. The Fed lowered rates twice since banks last reported, and the futures market is penciling in another rate cut as pretty likely for later this month. Lower rates generally squeeze banks’ margins. If rates drop, banks simply can’t make as much money.

The 10-year Treasury yield has fallen from last autumn’s high above 3.2% to recent levels just above 1.5% amid fears of economic sluggishness and widespread predictions of central bank rate cuts. The long trade standoff between China and the U.S. has also contributed to lower yields as many investors pile into defensive investments like U.S. Treasuries, cautious about the growth outlook.

Another thing on many investors’ minds is the current structure of the yield curve. The 10-year and two-year yields inverted for a stretch in Q3, typically an indication that investors believe that growth will be weak. That curve isn’t inverted now, but it remains historically narrow. Still, some analysts say the current low five-year and two-year yields might mean healthy corporate credit, maybe a good sign for banks.

Q3 Financial Sector Earnings

Analysts making their Q3 projections for the Financial sector expect a slowdown in earnings growth from Q2. Forecasting firm FactSet pegs Financial sector earnings to fall 1.8%, which is worse than its previous estimate in late September for a 0.9% drop. By comparison, Financial earnings grew 5.2% in Q2, way better than FactSet’s June 30 estimate for 0.6% growth.

Revenue for the Financial sector is expected to fall 1.6% in Q3, down from 2.6% growth in Q2, FactSet said.

While estimates are for falling earnings and revenue, the Financial sector did surprise last quarter with results that exceeded the average analyst estimate. You can’t rule out a repeat, but last time consumer strength might have taken some analysts by surprise. Now, consumer strength in Q3 seems like a given, with the mystery being whether it can last into Q4.

Upcoming Earnings Dates:

  • Citigroup (C) – Tuesday, October 15
  • JPMorgan Chase & Co. (JPM) – Tuesday, October 15
  • Wells Fargo (WFC) – Tuesday, Oct. 15, (B)
  • Goldman Sachs (GS) – Tuesday, October 15
  • Bank of America (BAC) – Wednesday, October 16
  • Morgan Stanley (MS) – Thursday, October 17

TD Ameritrade® commentary for educational purposes only. Member SIPC.

JJ Kinahan

I am Chief Market Strategist for TD Ameritrade and began my career as a Chicago Board Options Exchange market maker, trading primarily in the S&P 100 and S&P 500 pits. I’ve also worked for ING Bank, Blue Capital and was Managing Director of Option Trading for Van Der Moolen, USA. In 2006, I joined the thinkorswim Group, which was eventually acquired by TD Ameritrade. I am a 30-year trading veteran and a regular CNBC guest, as well as a member of the Board of Directors at NYSE ARCA and a member of the Arbitration Committee at the CBOE. My licenses include the 3, 4, 7, 24 and 66.

Source: How’s the Consumer Doing? Financial Sector Earnings Next Week Could Help Tell Us

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JP Morgan Chase: https://www.zacks.com/stock/quote/JPM… PNC Bank: https://www.zacks.com/stock/quote/PNC… US Bank: https://www.zacks.com/stock/quote/USB… Banks are usually at the front of earnings season and help to set the tone for the rest of the market. However, with a terrible interest rate outlook, can the space still post good profits and give us a positive lead-off for this earnings season? Follow us on StockTwits: http://stocktwits.com/ZacksResearch Follow us on Twitter: https://twitter.com/ZacksResearch Like us on Facebook: https://www.facebook.com/ZacksInvestm…

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Peloton IPO Disappoints, But Fintech Lender Oportun Gains 8% In Nasdaq Debut

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Oportun Financial, a fintech company that offers low-cost loans to those it calls “credit invisible,” raised $94 million in its IPO on Thursday. The company, which offered 23% of its outstanding shares to the public, debuted on the Nasdaq under the ticker OPRT.

The trading day’s most anticipated IPO, fitness startup Peloton, ended in disappointment after the stock closed 11% lower than its IPO price, but Oportun closed its first day of trading with an 8% gain and showed no signs of slowing down in the hours immediately following the market’s close.

Oportun sold 6.25 million shares (a quarter of which were from insiders) priced at $15, on the lower end of its target range of $15 to $17.  Shares jumped to $16.43, or nearly 10%, initially, but as of 2:00 p.m. EST were trading closer to $16. Shares had climbed back $16.17 by 4:00 p.m. EST.

Today In: Money

Oportun’s focus is the 100 million American borrowers with no credit or limited credit history, as well as those it says have been “mis-scored” by traditional methods that do not accurately reflect creditworthiness. The company brought in nearly $500 million in revenue last year, up from $360 million in 2017.

Oportun was founded in 2005 to serve the underbanked Hispanic community and once operated as Progreso Financiero. It has since broadened its mission and disbursed more than $7.3 billion in loans ranging from $300 to $9,000 to more than 1.5 million customers, about half of whom did not have a FICO score when they were awarded their first loan.

The San Carlos, California-based company uses traditional credit bureau scores as well as alternative data, like a borrower’s mobile phone and utility payment history, to assess creditworthiness, much in the same way that startups like Tala, which provides micro loans to the unbanked, and Kabbage, which provides small business loans, do.

Fintech IPOs have been few and far between in recent months, despite a public market newly saturated with tech giants like Slack, CrowdStrike, Uber, and Peloton. Only three fintech unicorns went public last year, according to CB Insights, and just one in the United States: online home improvement lender GreenSky, which raised $800 million in its May 2018 IPO. Its shares have fallen more than 70% since its offering.

According to a PitchBook analysis, none of the top ten most valuable fintech companies, including Stripe, Coinbase, Robinhood, and TransferWise, all of which are at least ten times Oportun’s size, are close to a public offering.

“Our decision to go public was driven in large part by our desire to get the capital we need to continue the pursuit of our mission,” Oportun CEO Raul Vazquez said. He says the company is planning to strengthen its presence in the 12 states in which it operates, expand to new markets on the East Coast, and launch a credit card product in the first quarter of 2020. Prior to its IPO, Oportun had raised $266 million from the likes of Fidelity Management and Institutional Venture Partners.

Oportun’s offering is expected to close on September 30. Barclays, J.P. Morgan Securities, and Jefferies were the lead underwriters.

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Sarah Hansen

I’m an assistant editor on Forbes’ Money team, covering markets, fintech, and blockchain. I recently completed my master’s degree in business and economic reporting at New York University. Before becoming a journalist, I worked as a paralegal specializing in corporate compliance and the Foreign Corrupt Practices Act.

Source: Peloton IPO Disappoints, But Fintech Lender Oportun Gains 8% In Nasdaq Debut

The Wall Street Journal created this video as part of their Financial Inclusion Challenge. Oportun was a finalist for using technology to help low-income workers build credit.

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The Fear Fund: Nancy Davis’ ETF Aims To Protect Investors From Scary Stuff, Like Recession And Inflation

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Stocks have recovered from last fall’s crash, low interest rates stretch out to the horizon and the VIX volatility index is half what it was at Christmas. Sit back and coast to a comfortable retirement.

No, don’t, says Nancy Davis. This veteran derivatives trader runs Quadratic Capital Management, where her somewhat contrarian view is that investors, all too complacent, are in particular need of insurance against financial trouble.

The Quadratic Interest Rate Volatility & Inflation Hedge ETF, ticker IVOL, is designed to provide shelter from both inflation and recession. Its actively managed portfolio mixes inflation-protected Treasury bonds with bets, in the form of call options, on the steepness of the yield curve.

Those options are cheap, for two reasons. One is that, at the moment, there is no steepness: Yields on ten-year bonds are scarcely higher than yields on two-year bonds. The other is that the bond market is strangely quiet. Low volatility makes for low option prices.

                                   

“Volatility has been squashed by central bank money printing,” Davis says, before delving deep into the thicket of option mathematics. If volatility in interest rates rebounds to a normal level, her calls will become more valuable. Alternatively, she would get a payoff if the yield curve tilts upward, which it has a habit of doing when inflation surges, stocks crash or real estate is weak.

If IVOL is all about peace of mind for the investor, it’s all about risk for its inventor. Davis, 43, has poured her heart, soul and net worth into Quadratic, of which she is the founder and 60% owner. If the three-month-old exchange-traded fund takes off, she could become wealthy. If it doesn’t, Quadratic will struggle.

The fund showed its worth in the first week of August, climbing 2% as the stock market sank 3%. But it needs a much bigger shock to stock or bond prices in order to get big. It has gathered only $58 million so far. A crash had better arrive soon; IVOL’s call options expire next summer. Quadratic, moreover, needs to somehow scale up without inspiring knockoff products from ETF giants like BlackRock.

Davis was a precocious trader. As an undergraduate at George Washington University, she took grad courses in financial markets while earning money doing economic research for a consulting firm. She put some of her paychecks into a brokerage account. “Some women love to buy shoes,” she says. “I love to buy options.”

This was in the 1990s, a good time to indulge a taste for calls. Davis made out-of-the-money bets on technology stocks, which paid off well enough to cover the down payment, in 1999, on a New York City apartment. Nice timing.

There may be a sour grape, but there’s also truth in her current philosophy that hedge funds are not such a great deal for investors. ETFs, she says, are more liquid, more transparent and cheaper.

Davis spent a decade at Goldman Sachs, most of it on the firm’s proprietary trading desk, then did a stint at a hedge fund. At 31 she quit to actively manage two kids. Returning to Wall Street after a three-year hiatus, she worked for AllianceBernstein and then did what few women do, especially women with children: She started a hedge fund.

Quadratic, whose assets once topped $400 million, used a hedge fund platform at Cowen & Co. When Cowen ended the partnership last year, Davis set about reinventing her firm. There may be a sour grape, but there’s also truth in her current philosophy that hedge funds are not such a great deal for investors. ETFs, she says, are more liquid, more transparent and cheaper.

IVOL’s 1% annual fee is stiff, but Davis says it’s justified for a fund that is not only actively managed but also invested in things that ordinary folk cannot buy. If you want to duplicate her position in the Constant Maturity Swap 2-10 call due July 17, you’d need to know what banker to ring for a quote, because this beast is not traded on any exchange. Each of these calls, recently worth $7.71, gives the holder the right to collect a dollar for every 0.01% beyond 0.37% in the spread between ten-year interest rates and two-year interest rates. The spread has to move a long way up before the option is even in the money. But at various times in the past the spread has hit 2%. Could it do that again? Maybe, at which point the option pays $163.

Starting a firm like Quadratic is like buying an out-of-the-money call: long odds, big payoff. Davis is doing what she was doing in college. You can’t stop a trader from trading.

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Source: The Fear Fund: Nancy Davis’ ETF Aims To Protect Investors From Scary Stuff, Like Recession And Inflation

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Nancy Davis, founder and CIO of Quadratic Capital Management, introduces her new ETF that takes advantage of interest volatility and inflation expectations: IVOL. In this interview with Real Vision’s co-founder & CEO Raoul Pal, Davis deconstructs the structure of the ETF, highlights the cost of carry associated with the strategy, and discusses her macro outlook and where she thinks the yield curve is headed next. Filmed on May 29, 2019. Watch more Real Vision™ videos: http://po.st/RealVisionVideos Subscribe to Real Vision™ on YouTube: http://po.st/RealVisionSubscribe Watch more by starting your 14-day free trial here: https://rvtv.io/2KHDkoc About Trade Ideas: Top traders unveil their specific plans for cashing in on the market’s next move. In these short videos, our traders cut straight to the point and lay out their thoughts on the best risk-reward trades of the moment. Each episode concludes with a visual recap of trade details including profit-loss potential and trade duration. About Real Vision™: Real Vision™ is the destination for the world’s most successful investors to share their thoughts about what’s happening in today’s markets. Think: TED Talks for Finance. On Real Vision™ you get exclusive access to watch the most successful investors, hedge fund managers and traders who share their frank and in-depth investment insights with no agenda, hype or bias. Make smart investment decisions and grow your portfolio with original content brought to you by the biggest names in finance, who get to say what they really think on Real Vision™. Connect with Real Vision™ Online: Twitter: https://rvtv.io/2p5PrhJ Instagram: https://rvtv.io/2J7Ddlw Facebook: https://rvtv.io/2NNOlmu Linkedin: https://rvtv.io/2xbskqx The ETF Play on Interest Rate Volatility (w/ Nancy Davis) https://www.youtube.com/c/RealVisionT… Transcript: For the full transcript visit: https://rvtv.io/2KHDkoc NANCY DAVIS: So we invest with options with a directional bias on everything. So our new product that we recently launched, IVOL, is the first inflation expectations and interest rate volatility fund out there. It’s a exchange traded product. RAOUL PAL: Does anybody even know what that means? NANCY DAVIS: So what we do is for an investor, if you’re an equity investor, you want to have tail protection, for instance. It’s hard to own equity volatility as an asset allocation trade because it decays so aggressively. So it’s a more benign way to carry volatility as an asset class from the long side using fixed income vol. It’s not as sensitive as equity vol, but it’s a lot lower level. Like, the vol we’re buying is 2, 2 basis points a day in normal space. So it’s very, very cheap, in my opinion, and it gives you a way to have an asset allocation to the factor risk of volatility without having as much decay as you would in the equity space. And then for a fixed income investor, the big risk there is obviously Central Bank policy, fiscal spending, trade wars, as well as inflation expectations. And we saw a need to really give a fixed income investor a way to capitalize on the deflation that’s been priced into the market for the next decade. I mean, so current US inflation is around 2%. The five-year break-even is 1.59%. So that’s an opportunity in an option space. And so it’s long options with TIPS. And so that gives investors exposure. It gives you inflation-protected income, but also options that are sensitive to inflation expectations. And we think it’s pretty– you know, you’re never going to time these macro calls perfectly. But given the Central Bank in the US is so focused right now on increasing inflation expectations, and there’s been so much talk about the yield curve inverting– and that’s kind of crazy. If you step back and you’re like, all right, we have a $3.9 trillion balance sheet. We have a fiscal budget deficit. We have unclear or radically changing monetary policy. If you look where we are now with so many cuts priced into the interest rate markets in the US versus where we were four months ago, it’s wildly different. And at the same time, interest rate volatility is literally at generational lows. Equity, while people talk about equity vol, I think VIX today is 17. It’s low, I guess, in the context. But when you look at a percentile, like one-year vol over the last decade in equities, it’s about the 70th percentile. So it might be low, but it doesn’t mean it’s cheap. Interest rate volatility is literally at, like, 2, 1, you know, 0.

Category

News & Politics

Council Post: How To Prepare For The Recession As A Real Estate Investor

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It seems like all the talk these days is centered around the inevitable recession. I see an article every day claiming that the end is near. Recently, the yield curve inverted, which many point to as a strong indicator of an oncoming recession. But, there are also many experts who claim the economy is strong. They cite strong growth, spending, development and other indicators to support their theory. No matter which way you lean, it is inevitable that there will be a market correction/recession at some point. It’s impossible to say for sure when or how bad it will be.

As a real estate investor, you want to be prepared for when it does happen. If you think back to the last crash in 2008, the best deals were the years after that. If you had capital, you made a lot of money. It almost didn’t even matter what you bought because prices were so insanely low. What I’ve heard most from investors looking back at it is, “I wish I would’ve bought more properties.”

Even though you can’t predict when it will happen, you can still take steps to get prepared. If you’re prepared, you’ll be able to capitalize. Let’s go over how people will be affected during the recession.

Sellers

In a recession, there will be many more distressed sellers than there are today. Since the last downturn, sellers have been able to refinance or sell if they got in a tight spot because of appreciation. Since prices will be going down, many will not have enough equity to refinance or sell. They’ll have to face foreclosure or a short sale. The sellers who do have equity will want to sell out of fear that they’ll lose their equity if they wait any longer.

Flippers

Many flippers will have exited the market. Prior to the recession actually happening, they’ll notice inventory rising, days on market increasing and their properties selling for less than anticipated. As a result, their margins will tighten. They may lose money or simply not make the return needed to justify the risk. Therefore, there will be far fewer flippers than you see today.

Wholesalers

Many wholesalers will leave the market. Even though there are more distressed sellers, there are fewer sellers with equity. They’ll notice that there aren’t as many flippers to sell to anymore either. The flippers who have weathered the storm will ask for significant discounts in order to do a deal. Wholesalers’ margins will begin to tighten to the point where it doesn’t make sense to spend marketing dollars anymore.

Contractors

Contractors will not have as many job opportunities since there will be fewer people buying and renovating homes. In order to get jobs, they will have to lower their prices to stay busy.

Real Estate Agents

With fewer buyers and sellers in the marketplace, there will be more competition to acquire clients. Real estate agents will have to spend more marketing dollars to attract them or take discounted commissions.

All these people play a vital role in real estate investing. You should ask yourself where you fit in with all of this. What’s the best position to be in?

The answer: become a cash investor.

In today’s market there are a lot of cash investors, but many will be wiped out or scared during the recession. So there will be far less competition in all aspects of real estate investing. The cash investors who do stay in it will own the market during a recession. With cash, you have many options. You can choose to flip homes with little competition. You can buy a bunch of discounted rentals and build your portfolio. Or you can lend the money to operators and have them do all the work for you.

Again, the No. 1 regret people told me they had after the last recession was that they didn’t buy enough homes. It wasn’t that they wish they would’ve wholesaled more homes or sold more homes as an agent. The person actually buying homes is the one who thrives in the recession.

The cash investor will be able to buy directly from all the motivated sellers with less competition. They’ll be able to buy from wholesalers at deeper discounts because there are more deals than money. They’ll be able to get cheaper labor from contractors because they’ll be one of the only sources of consistent work, and agents will work harder to find deals for cash investors because there will be fewer retail clients.

As you prepare for an oncoming recession, the most important thing you can do is become a cash investor. Here are a few ways how:

• If you have properties or assets, consider selling some so that you have more liquidity.

• If you’re a wholesaler or real estate agent, look into raising capital so that you can start buying the deals you find.

• If you’re a flipper, start building more relationships and using more lenders now so a trusting relationship is in place before the recession hits.

We don’t know when the next recession will be, but it doesn’t really matter. You should be preparing as if it could be tomorrow. Figure out how you can become a cash investor, and you will be ready for it.

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Ryan Pineda Ryan Pineda

Ryan Pineda is the CEO of Homerun Offer.

Source: Council Post: How To Prepare For The Recession As A Real Estate Investor

Lets talk about a potential recession, what might happen, and how you can best prepare – enjoy! Add me on Instagram: GPStephan – Avocado Toast Merch: https://bit.ly/2DhFyo3 GET $50 OFF FOR A LIMITED TIME WITH COUPON CODE: THANKYOU50 The Real Estate Agent Academy: Learn how to start and grow your career as a Real Estate Agent to a Six-Figure Income, how to best build your network of clients, expand into luxury markets, and the exact steps I’ve used to grow my business from $0 to over $125 million in sales: https://goo.gl/UFpi4c Join the private Real Estate Facebook Group: https://www.facebook.com/groups/there… So first, lets talk about what’s influencing the market and what factors we should be made aware of: The first is rising interest rates: This means that the cost of borrowing money is expected to INCREASE over the next few years. When borrowing gets more expensive, you either need to RAISE prices to keep the profit margins the same – which means things get more expensive to you as the customer. Second, we’ve begun seeing the warning signs of the INVERTED YEILD CURVE – which, according to just about every article out there, the inverted yield curve has historically been associated with a high likelihood of upcoming recession. Third, we have the tariffs and the uncertainty surrounding what may or may not happen. And when it comes to investments, the ONE thing all investors dislike is UNCERTAINTY. When people are UNCERTAIN, they don’t invest, they hold cash…and that causes stock prices to fall. And fourth…we’re seeing a slow down in nearly all markets. Here’s what I think is going to happen… First, I’ve noticed QUITE a lot of what I call “gamblers fallacy.” This is the expectation that the market will drop, JUST because we’ve been in the longest bull market in HISTORY and that means it’s “overdue” and more likely to happen. Second, I believe that a lot of our “Recession Talk” is already SOMEWHAT factored into the price. Think of all the people NOT investing right now because they want to wait for lower prices…that is, in itself, self fulfilling and lowering prices. And third…no one, including myself, knows whats going to happen. No ONE. And fourth, you have so many false news articles designed to APPEAR like credible new sources so they get pumped through Facebook and Blogs for the sole purpose of manipulating you into buying their products. Well here’s the reality: First, NO ONE can predict when a recession will happen. We’ve been seeing these articles since 2013 from people who claim the recession is coming any month now. It’s never ending. You’ll read about this one expert predicting something, then another expert predicting something else, and they keep repeating themselves until eventually, one of them is right. Then they use that credibility of being right ONCE to propel them into the next opportunity. Second, it’s important you PREPARE for a recession in ways you can CONTROL: First, you CAN control whether or not you keep a 3-6 month fund in the event you lose your job or something unexpected comes up. This is absolutely ESSENTIAL for you to do. Second, you CAN control whether or not to have too many outstanding debts that might need to be paid down. If you’re over leveraged, or if you have high interest debt, it’s in your best interest to pay those off to free up cashflow in the event of a downturn. Third, you CAN control how much you spend…if you’re spending is too high, it’s important to cut those back so that you can save more money to invest. And when you DO invest, invest long term. Ideally, these are investments you should plan to keep 10-20 years. For me, I see lower prices as an opportunity. And to alleviate some of these concerns, you don’t need to just drop ALL of your money in the market at once…buy a small amount each and every month. This way, if the price goes down..you’re buying in cheaper and cheaper over time. If it goes up, you’re buying in little bit little…and anytime when it comes to investing, slow and steady wins the race. This isn’t about making an immediate 10% profit in a month…this is about investing for your future in a slow, stable way where you don’t feel stressed whether the market goes up or down. For business or one-on-one real estate investing/real estate agent consulting inquiries, you can reach me at GrahamStephanBusiness@gmail.com My ENTIRE Camera and Recording Equipment: https://www.amazon.com/shop/grahamste… Favorite Credit Cards: Chase Ink 80k Bonus Point Offer – https://www.referyourchasecard.com/21… American Express Platinum – http://refer.amex.us/GRAHASOxHd?XLINK…

Category

Education

What Is The Average Retirement Savings in 2019?

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It costs over $1 million to retire at age 65. Are you expecting to be a millionaire in your mid-60s?

If you’re like the average American, the answer is absolutely not.

The Emptiness of the Average American Retirement Account

The first thing to know is that the average American has nothing saved for retirement, or so little it won’t help. By far the most common retirement account has nothing in it.

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Sources differ, but the story remains the same. According to a 2018 study by Northwestern Mutual, 21% of Americans have no retirement savings and an additional 10% have less than $5,000 in savings. A third of Baby Boomers currently in, or approaching, retirement age have between nothing and $25,000 set aside.

The Economic Policy Institute (EPI) paints an even bleaker picture. Their data from 2013 reports that “nearly half of families have no retirement account savings at all.” For most age groups, the group found, “median account balances in 2013 were less than half their pre-recession peak and lower than at the start of the new millennium.”

The EPI further found these numbers even worse for millennials. Nearly six in 10 have no retirement savings whatsoever.

But financial experts advise that the average 65 year old have between $1 million and $1.5 million set aside for retirement.

What Is the Average Retirement Account?

For workers who have some savings, the amounts differ (appropriately) by generation. The older you are, the more you will have set aside. However there are two ways to present this data, and we’ll use both.

Workers With Savings

Following are the mean and median retirement accounts for people who have one. That is to say, this data only shows what a representative account looks like without factoring in figures for accounts that don’t exist. This data comes per the Federal Reserve’s Survey of Consumer Finances. (Numbers rounded to the nearest hundred.)

• Under age 35:

Average retirement account: $32,500

Median retirement account: $12,300

• Age 35 – 44:

Average retirement account: $100,000

Median retirement account: $37,000

• Age 45 – 55:

Average retirement account: $215,800

Median retirement account: $82,600

• Age 55 – 64:

Average retirement account: $374,000

Median retirement account: $120,000

• Age 65 – 74:

Average retirement account: $358,000

Median retirement account: $126,000

For households older than 65 years, retirement accounts begin to decline as these individuals leave the workforce and begin spending their savings.

Including Workers Without Savings

When accounting for people who have no retirement savings the picture looks considerably worse. Following are the median retirement accounts when including the figures for people with no retirement savings. The following do not include mean retirement accounts, as this would be statistically less informative than median data.

• Age 32 – 37: $480

• Age 38 – 43: $4,200

• Age 44 – 49: $6,200

• Age 50 – 55: $8,000

• Age 56 – 61: $17,000

How Much Should You Have Saved For Retirement?

So that’s how much people have saved for retirement, or more often don’t. Now for the more useful question: How much should you have saved for retirement?

The truth is that there’s no hard and fast rule. It varies widely by your age, standard of living and (perhaps most importantly) location. Someone who rents an apartment in San Francisco needs a whole heck of a lot more set aside than a homeowner in the Upper Peninsula of Michigan.

The rule of thumb is to estimate by income. Decide the income you want to live on once you retire, then picture your life as a series of benchmarks set by age. At each age you want a multiple of this retirement income saved up. Your goal is to have 10 to 11 times your desired income in savings by retirement.

• By age 30: between half and the desired income in savings

• By age 35: between the desired amount and double the desired income in savings

• By age 40: between double and triple the desired income in savings

• By age 45: between triple and quadruple the desired income in savings

• By age 50: between five times and six times desired income in savings

• By age 55: between six times and seven times desired income in savings

• By age 60: between seven times and nine times desired income in savings

• By age 65: between eight times and 11 times desired income in savings

So, if you earn $50,000 per year, by age 40 you will want to have between $100,000 and $150,000 in retirement savings set aside. The formula grows later in life for two reasons. First, as your savings accumulate they will grow faster. Second, as you approach retirement it is often wise to accelerate your savings plan.

What You Should Do Next for Your Retirement Savings

Retirement is approaching a crisis. In the coming decades millions of Americans will get too old to continue working without the means to stop. Millennials, crippled by debt from graduation, will turn this crisis into a catastrophe in about 40 years. And Social Security, designed to prevent exactly this problem, covers less than half of an average retiree’s costs of living.

It’s beyond the scope of this article to discuss exactly how this happened, but if you’re one of the many people who have fallen behind on retirement savings, don’t panic. There’s plenty you can do. But… it might not necessarily be easy.

The key is to think about retirement savings like a debt. This is money you owe to yourself and it charges reverse interest. Every day you go without adding money to your retirement account is a day you lose investment income. That’s money that you’ll need someday and won’t have.

Next, take stock of where you are. How much will you want to live on in retirement and how much do you have saved today? Use our chart above. That will tell you how far behind you are compared to where you need to be. Are you a 40 year old with $25,000 in savings who will want to live on $50,000 per year in retirement? Then you’ve got $75,000 you need to make up for.

Now, begin catching up. Chip away at that debt every week and every month. Pay into your 401k and IRA the same way you would whittle down a credit card. By thinking about it this way, as a specific goal, you can take away some of the fear of saving for retirement and turn it into an achievable (if large) amount. It’s not just some big, black hole you can never fill. It’s a number, and numbers can go down.

It won’t necessarily be fun. You might have to cut back on luxuries or take on some extra work, but even if you start late in life you can catch up on your retirement.

Now’s the right time to start.

By:

Source: What Is The Average Retirement Savings in 2019?

Personal Finance Savings Retirement Employee Benefits Financial Planning IRAs

Dimensional Vice President Marlena Lee, PhD, explains how her research on replacement rates can help you prepare for a better retirement outcome. See more here: https://us.dimensional.com/perspectiv…

ONEX Is Coming Back & Its Actually Perfect For Investing

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Founded in 1984, ONEX invests and manages capital on behalf of his shareholders, institutional investors and high net worth clients from around the world. ONEX platform include: ONEX Partners, private equity funds focused on larger opportunities in North America and Europe, ONCAP, private equity funds focused on middle market and smaller opportunities in North America, ONEX credit, which manages primarily non-investment grade debt through collateralize loan obligations, private debt and other credit strategies and Gluskin Sheff’s actively managed public equity and public credit funds.

In total ONEX assets under management today are approximately $39 Billion, of which approximately $6.9 Billion is their shareholder’s capital. With offices in Toronto, New York , New Jersey & London, ONEX is experienced management teams are collectively the largest investors across ONEX platforms.

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ONEX main task is to increase customer profits. In trading, ONEX use automated bots, the latest strategies and approaches for working on each exchange, this ensures the declared high income. Safety is ONEX top priority. In every decision make, ONEX is supervised by security concerns. They use the most reliable and effective technologies available to ensure the safety of investors funds.

The investor has the right to:

  • 1. Produce awareness of others in order to attract them to participate in ONEX Financial Corporation;
  • 2. Create sites and post information about the company;
  • 3. Send to Administration comments or feedback to improve ONEX services;
  • 4. Require ONEX Financial Corporation fulfillment of the conditions of ONEX agreements

The ONEX Financial Corporation team has specifically designed smart, high-return investment packages. Each package has its own life and type of charges. Be careful when choosing an investment rate. Those who believe in us will be satisfied and get a good profit. For us, the most important thing is the loyalty of our customers, therefore ONEX Financial Corporation always tries to take into account the general situation in the cryptocurrency market, this allows us to consistently increase the company’s profits, and earn not only an increase but also a decrease in the market.

Source: https://onexfinancial.com

Microloan Startup Tala Raises $110 Million In New Funding

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Tala, a Los Angeles startup that makes microloans to consumers and small business owners in emerging markets, is announcing today that it has raised $110 million in funding. The new Silicon Valley venture capital firm RPS Ventures, cofounded by Kabir Misra, former managing partner at Softbank’s $100 billion Vision Fund, is leading the round. Tala’s backers include PayPal, billionaire Steve Case’s VC firm Revolution, Chris Sacca’s Lowercase Capital and Data Collective, among others. The new funding values Tala at nearly $800 million, according to an investor. Tala has raised more than $200 million in equity investment to date.

Shivani Siroya, 37, founded Tala in 2011 after stints as an investment banking analyst and as an analyst at the U.N. Population Fund, where she did socioeconomic research. Tala’s mobile app lets people in Kenya, the Philippines, Tanzania, Mexico and India take out small loans ranging from $10 to $500. Most use the app to invest in their small businesses, like shops and food stands. To evaluate borrower risk, Tala uses cell phone data instead of credit scores, looking at loan applicants’ habits, like whether they pay their phone bills on time.

Siroya first launched Tala’s app in Kenya in 2014. Today it has more than four million customers who take out three to six loans a year at a 10% average monthly interest rate. Its 600 employees are spread across offices in Santa Monica, Kenya, Mexico, the Philippines and India. The company made Forbes’ Fintech 50 list earlier this year.

Tala’s closest competitor is Branch, a five-year-old San Francisco company led by Matt Flannery, who previously cofounded donation crowdfunding platform Kiva.org. Branch has four million customers and an average monthly interest rate of 15%. Earlier this year, it raised $70 million in equity financing from investors like Visa and Andreessen Horowitz, plus $100 million in debt. Tala also raised $100 million in debt over the past year to help fund its loans.

With its new capital, Tala plans to make a bigger push into India and expand to new countries, potentially in regions like West Africa, Southeast Asia and Latin America. It also plans to launch new products. In Kenya, Tala has already tested a micro health insurance offering that would cover customer visits to a hospital. It expects to launch its first microinsurance product in the next 12 months. It has also piloted a financial education and coaching program, and it plans to test additional products over the next year.

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Jeff Kauflin

I cover fintech, cryptocurrencies, blockchain and investing at Forbes. I’ve also written frequently about leadership, corporate diversity and entrepreneurs. Before Forbes, I worked for ten years in marketing consulting, in roles ranging from client consulting to talent management. I’m a graduate of Middlebury College and Columbia Journalism School. Have a tip, question or comment? Email me jkauflin@forbes.com or send tips here: https://www.forbes.com/tips/. Follow me on Twitter @jeffkauflin. Disclosure: I own some bitcoin and ether.

Source: https://www.forbes.com/

Trust: How do you earn it? Banks use credit scores to determine if you’re trustworthy, but there are about 2.5 billion people around the world who don’t have one to begin with — and who can’t get a loan to start a business, buy a home or otherwise improve their lives. Hear how TED Fellow Shivani Siroya is unlocking untapped purchasing power in the developing world with InVenture, a start-up that uses mobile data to create a financial identity. “With something as simple as a credit score,” says Siroya, “we’re giving people the power to build their own futures.” TEDTalks is a daily video podcast of the best talks and performances from the TED Conference, where the world’s leading thinkers and doers give the talk of their lives in 18 minutes (or less). Look for talks on Technology, Entertainment and Design — plus science, business, global issues, the arts and much more. Find closed captions and translated subtitles in many languages at http://www.ted.com/translate
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More Selloff Strategies: Cramer’s ‘Mad Money’ Recap

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When investors encounter tough days in the stock market, they need a game plan for how to respond, Jim Cramer told his Mad Money viewers Friday. That means knowing what type of selloff you’re dealing with and how best to navigate it. Fortunately, history can be your guide in identifying those inevitable moments of weakness and keep you from panicking.

Stocks finished down Friday, as Donald Trump’s recent threat to levy 10% tariffs on an additional $300 billion of Chinese imports overshadowed the latest U.S. jobs data.

The Dow Jones Industrial Average, which hit a session low of 334 points, finished down 98 points, or 0.37%, to 26,485. The S&P 500, which saw its worst week of the year, fell 0.73% and the Nasdaq dropped 1.32%. The Dow had its second worst week of the year as it fell 2.6%.

Cramer told his viewers that the U.S. stock markets have only seen two truly horrendous selloffs since he began trading in 1979. Those were the Black Monday crash in October 1987 and the rolling crash of the financial crisis from 2007 through 2009. But while both of these declines saw huge losses, they were in fact very different.

Many investors don’t remember Black Monday, where the Dow Jones Industrial Average lost 22% in a single day. Even fewer remember that the market lost 10% during the week prior, and continued its losses on the Tuesday after. While it wasn’t known at the time, this crash was mechanical in nature, caused by a futures market that overwhelmed the ability to process the flood of transactions. In the confusion, buyers stepped aside and prices plunged.

The carnage wasn’t stemmed until the Federal Reserve stepped in with promises of extra liquidity. But in the end, the economy was strong. There was nothing wrong with the underlying companies, the market just stopped working. That’s why it only took 16 months to recover to their pre-crash levels.

Investors witnessed similar mechanical meltdowns in the so-called “flash crash” of 2010 and its twin in 2015. On May 6, 2010 at precisely 2:32 p.m. Eastern, the futures markets again overwhelmed the markets, only this time machines were doing most of the trading. The crash lasted for a total of 36 minutes, during which time the Dow plunged 1,000 points from near the 10,000 level.

In August of 2015, another flash crash occurred at the open, with the Dow again falling 1,000 points in the blink of an eye. In the confusion, traders couldn’t tell which prices were real and which ones were pure fantasy. Only those with strong stomachs risked trading at the heart of the decline, but those traders were rewarded handsomely.

In all of these cases, Cramer said, the machinery of the markets was broken. Even the circuit breakers put in place after 1987 were not able to stem the declines and in fact, did very little to even slow them down. But for those investors who were able to recognize what was actually happening, these declines were a once- (well, twice-) in-a-lifetime gift.

Cramer and the AAP team are making three more trades as they reposition on this week’s selloff, including Burlington Stores, (BURL – Get Report) and Home Depot (HD – Get Report) . Find out what they’re telling their investment club members and get in on the conversation with a free trial subscription to Action Alerts Plus.

The Great Recession

The Great Recession was a totally different animal. The market began falling in October 2007, but didn’t bottom until March 2009, almost two years later. Afterwards, it took until March of 2013, four years later, for the markets to get back to even. Cramer said this kind of decline is the most dangerous, but fortunately, it’s truly a once-in-a-lifetime event, only occurring every 80 years or so.

The Great Recession was caused by the Fed raising interest rates 17 times in lock step, trying to cool an already cooling economy. The recession could have been avoided had the Fed done their homework and actually talked to CEOs, as Cramer did at the time.

Cramer recalled talking to the CEOs of banks, all of whom told him that defaults on mortgages were on the rise in a fashion none of them had seen before. Cramer’s famous “They know nothing” rant on CNBC stemmed from those conversations, as the Fed did nothing until the first banks began to collapse. The market fell 40% before finally finding its footing.

How can investors identify this type of devastating decline? Cramer said investors can ask whether the economy is on a solid footing. Is business declining? Is employment falling? Are interest rates still rising even as cracks are appearing? If big companies are unable to pay their bills, the problem could be a lot deeper than you think.

On Real Money, Cramer keys in on the companies and CEOs he knows best. Get more of his insights with a free trial subscription to Real Money.

Today’s Market

Today’s market is not like 2007, however, Cramer said. Business is stronger, our banking system is stronger and there’s still time for the Fed to take their foot off the brakes and wait for more data before proceeding.

So you’ve just spotted a mechanical breakdown in the market, what should you buy? Cramer said he’s always been a fan of accidental high-yielders, companies whose dividend yield is spiking because their share prices are falling with the broader averages.

He said that these stocks are always among the first to rebound, as their dividends help protect them. He advised always buying in wide scales as the market declines. That way, if the rebound is swift, you’ll still make a little money, but if it’s a larger, multiday sell off, you’ll make even more.

Cramer reminded viewers that when the Fed is cutting interest rates, almost every market dip is a buying opportunity. But when it’s raising rates, things get tricky. Not every rate hike causes a crash, however, only ones that push rates high enough to break the economy.

During these times, it’s important to remember that stocks aren’t the only investment class out there. You can also invest in gold, bonds or real estate to stay diversified.

It’s Not Just the Fed

The Fed isn’t the only reason why the market declines, and Cramer ended the show with a list of the other common culprits.

The first sell-off culprit are margin calls. Too often, money managers borrow more money than they can afford and when their bets turn south, they are forced to sell positions to raise money. We saw this happen in early 2018 when traders were betting against market volatility by shorting the VIX. When volatility returned, these traders lost a fortune and the whole market suffered.

There are also international reasons for the market to sell off, including crises in Greece, Cyprus, Turkey and Mexico, among others. Cramer said in these cases, it’s important to ask whether your portfolio will actually be impacted by these events. Usually, the answer is no.

Then there’s the IPO market. Stocks play by the laws of supply and demand after all, so when tons of new IPOs are hitting the markets, money managers often have to sell something in order to buy them. Declines can also stem form multiple earnings shortfalls as well as, yes, political rhetoric coming from Washington.

Cramer said many of these declines happen over multiple days. The key is to watch if the selling ends by 2:45 p.m. Eastern. If so, it may be safe to buy. But if not, there will likely be more selling the following day and it will pay to be patient.

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Source: More Selloff Strategies: Cramer’s ‘Mad Money’ Recap

 

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